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At the close of another hot day on the coast of Djibouti, a tiny country on the Horn of Africa, workers are clambering over huge concrete cubes beneath a red crane. One by one, the 2,500-tonne blocks are being submerged in the water: part of a plan to stun the shoreline into submission and create a vast new port at the heart of global trade.

“We’re going to fill in the sea,” Abdo Mohammed, the logistics manager for the $590m project, tells me with quiet glee.

Thirty per cent of all shipping in the world passes this point on the north-east edge of Africa, where the water narrows to a few kilometres opposite Yemen. A former French colony that became independent only in 1977, Djibouti sits at the southern entrance to the Red Sea, en route to the Suez Canal — a waypoint between Africa, India and the Middle East. Over the past 15 years, the country has set about capitalising on its location at the nexus of international trade: once completed, the Doraleh Multi-Purpose Port will be the largest of eight ports that together will handle containers, livestock, oil, phosphates and more.

But the geostrategic ambition of the small, authoritarian state — which at 23,200 sq km (8,950 sq miles) is only slightly larger than Wales — does not stop there. The US, several European countries and Japan have all pinned global military ambitions on Djibouti. Now China is set to do the same.

Construction began on the new port in 2013. “But then [last year] we had to change things around,” says Mohammed. He gestures with his phone in the direction of the arid land behind us. “We had to make a new section over there, beside the mountain, inside the port. That’s where the Chinese military base will be.”

The sun, by now a giant orange disc, slips behind the sea. Mohammed’s nonchalant disclosure marks the culmination of the search that brought me here. China is planning its first overseas military base at Doraleh, within a few kilometres of America’s largest military outpost in Africa. As superpowers jostle for strategic influence, this impoverished state, home to fewer than a million people, is helping to shape a new world order.

Djibouti first came to the attention of France when the French navy commandeered its coastline in 1862 as a stop to refuel and restock coal steamers en route to French Indochina. French Somaliland, as the colony became known soon after, opened up the landlocked African hinterland to international trade; in the 1910s, a new railway from Addis Ababa to Djibouti linked Ethiopia to the sea. Djibouti is a barren land of mountains and desert, and its location has always been its most precious resource. Even now, it is more port city than country: by far the majority of the population lives in the seaside capital of the same name.

A military and trading entrepôt that welcomes all comers, Djibouti today oozes espionage chic. It is home to pirate-hunters, soldiers, spies and Arab traders. Conservative Somali culture mixes with the legacy of flamboyant French Legionnaires.

“Djibouti is really experiencing a boom,” says Ahmed Osman Guelleh, the 56-year-old chief executive of GSK Group, a family logistics company that has forged its fortune through shipping. Yet the baking heat makes it remarkable that anything much gets done at all. One US soldier who served here describes it as “a hot hell box in the armpit of Africa”. Temperatures reach into the mid-40s for nearly half the year. Government offices shut down at 12.30, and an entire nation of men, and many women, take up the national pastime: chewing for hours on khat, a bitter leaf so renowned for its amphetamine-like properties that it is banned in Britain and the US.

The drug gives its wired adherents a daily ­buzz — and mollifying fuzz — they cannot be without. I watched market traders, government officials and on-duty police officers chew khat. Even the 49-year-old finance minister Ilyas Moussa Dawaleh admitted to me that his family has shares in the largest khat importer.

“If Djiboutians stopped chewing khat for seven days, they would overthrow the government,” says one port worker. He is only half joking. Eccentric and appealing as it is, Djibouti is authoritarian and brittle too. President Ismaïl Omar Guelleh, a former head of the secret police who has run the country since 1999, will seek re-election for his fourth term on April 8, having altered the constitution in 2010 to allow him to extend his rule. The opposition complains regularly of illegal security crackdowns and the impossibility of free and fair elections.

Flanked by Eritrea, Ethiopia and Somalia, Djibouti is viewed as a haven in the unstable Horn of Africa and hosts armed forces from around the world. “There’s no country with so many military bases. You can throw stones from one end to the other of Djibouti and find military bases all the way, right next to each other,” says one senior official. France pledged to protect its former colony as part of a post-independence deal; after 9/11 it was joined by the US, which chose Djibouti as its base for rooting out emerging Islamist terror networks in the region. Initially, US troops were stationed on a navy ship but in 2003 they set up in Camp Lemonnier, a rundown French Legionnaires’ base beside the airport. The site has since expanded from 88 acres to 500. In 2014 a 10-year lease nearly doubled the annual rent the US pays Djibouti to $63m, with an option to extend for another 10 years.

In the past decade piracy has increased the tiny state’s strategic importance; as Somali pirates took hundreds of crews and vessels captive, costing global trade an estimated $7bn at a 2011 peak, several nations contributed to anti-piracy missions in Djibouti, including Germany, Italy and Japan.

Russia may also be interested in establishing a base. Djibouti’s foreign minister Mahmoud Ali Youssouf, an articulate 50-year-old with a reputation as the most competent minister in the government, tells me that while Djibouti turned down a request from Iran to host its military here — “because we think that Iran’s policy in the region is not a peaceful one” — it has not declined a similar recent request from Moscow. “Russia is a key player, it is a permanent member of the Security Council,” he tells me in his office. “For Russia we have no problem.”

The country is already so full of military personnel that its small, sandy capital city at times resembles a sprawling garrison. US fighter jets share the same airport runway as commercial airlines at the civil airport. French soldiers in impossibly skimpy, neon-hued shorts jog past brightly veiled women and mosques. The five-star Palace Kempinski hotel, a bubble of exclusivity in the otherwise poor city, serves $5 Cokes and popcorn tossed in truffle butter to crewcuts in uniform. Battle tattoos flash on the biceps and backs of Speedo-wearing soldiers in the infinity pool. Special-forces operatives sip Moscow Mules on the pontoon. International spies and drones operate daily. One western spy told me they enjoyed Djibouti because it is “quirky”.

Despite the multi-force troop presence, when rumours started circulating early last year that China was not only going to build its first overseas military base but that it was going to build it in Djibouti, rival powers were taken by surprise. Western countries and their allies view the prospect of China’s military arrival at a global chokepoint for trade and security with alarm. An anti-piracy mission in the Gulf of Aden in 2008 was the first time China had sent naval ships on a mission outside its territorial waters in more than 600 years.

Since then, Beijing has gradually shifted its foreign policy to embrace a more assertive military posture, moving to a strategy it calls “active defence”. Its pursuit of a Djibouti base has been cloaked in secrecy, with public statements short on detail. Some diplomats speak darkly of China’s “100-year horizons”. One senior western diplomat, with a more immediate timeframe in mind, says, “The worst-case scenario is that they [China] develop this web of bases to give them a kind of control over strategic waterways all the way into the Med.”

In financial terms, China is already what one official in the region describes as the “major show” in town. Following the model it has employed throughout Africa — offering billions of dollars in financing in exchange for access to resources — China is helping to bankroll a targeted $12.4bn of spending on huge infrastructure projects including the Doraleh port and a new railway to Ethiopia. Amid the boom in construction, Djibouti’s growth rate is likely to surpass 7 per cent this year. But the investments are having “limited trickle-down effects”, according to the International Monetary Fund. Nearly two-thirds of the population lives in poverty, and half the labour force is unemployed. In the absence of many skilled domestic workers, Chinese labourers have been flown in.

Loans from China for a water pipeline and the new railway from Ethiopia — agreed before talk of a military base — come to $814m, half of the country’s annual GDP. In 2013 the IMF suspended discussions with Djibouti because of its concerns over debt vulnerability; last year it warned of “elevated solvency risks”. Finance minister Dawaleh tells me he recently travelled to Beijing, seeking to negotiate easier repayment plans. Djibouti’s public and publicly guaranteed debt burden is likely to reach 81 per cent of GDP next year, mostly as a result of Chinese financing.

“We don’t want the Americans to leave but the Chinese invest billions of dollars in our infrastructure; that’s what the Americans are not doing,” foreign minister Youssouf explains. “So we are trying to keep the balance to see where our interest lies, as a small country with very limited resources.”

In early 2014, Djibouti and China signed an agreement to allow the Chinese navy — which ­contributes to international anti-piracy operations — to use its port. Beijing made no official comment when President Guelleh said, last May, that Djibouti was in talks with China to establish a military base. In November, China confirmed only a naval ­“support facility” destined for Djibouti, with a spokesperson saying, “It will help China’s military further carry out its international responsibilities to safeguard global and regional peace and stability.” Even in February this year, announcing the start of work on the project, China referred only to “logistical facilities” for naval rest and resupply. The Chinese embassy in Djibouti turned down my requests for an interview with the ambassador.

But when I speak to Youssouf, he is candid and happy to provide details of the deal he and President Guelleh have struck with China. “The terms of the contract and agreement are very clear and they are the same for each and every country that requested military presence in Djibouti,” he tells me in his office in the capital.

China will, he says, pay $20m a year for a 10-year lease for the military base, with an option to extend for a further 10 years. There will probably be “a few thousand” troops and military staff at the site, along with its own naval berth at the new port. It would use the base to protect its national interest — monitoring its merchant vessels passing the Bab el-Mandeb Strait that leads to the Suez Canal, and for its navy to refuel and restock — much as the French did more than 150 years ago. Youssouf also says that China, which is slated to build a second major airport in the country, would have as much right to use drones as the US and French. China’s foreign ministry declined to respond to faxed questions from the FT about the terms of the new base.

“The Americans have enough technology, enough fighter aircraft, enough drones [here] to control each and every piece of this land and even beyond,” says Youssouf. “Why should the Chinese not have the right to also use those materials . . . to preserve and protect their interest in the Strait of Bab el-Mandeb. Why?”

Official comments from those potentially affected are clipped: “We follow the situation about the Chinese base very closely,” says Tatsuo Arai, Japan’s ambassador to Djibouti. Youssouf admits that both Japan and the US have “expressed their worries” to both him and President Guelleh about the arrival of a Chinese military presence so close to their own, and its potential capabilities.

“Those preoccupations and worries expressed by the Americans and others are groundless, for us at least,” Youssouf tells me, deriding the west’s “hypocritical vision of our common interest”.

“We can host Chinese bases as we can host American bases . . . They might have conflicting interests elsewhere but here they cannot have conflicting interests, because the strait of Bab el-Mandeb is vital for each and everyone in the world,” he says. “There is no conflict of interest when it comes to global peace. China has no interest in doing anything [bad]. Everybody knows that nobody can take any action that could jeopardise the maritime traffic . . . This is a vital lifeline for the whole of international trade.

“We tried to reassure [the Americans and Japanese ], saying don’t worry, the same agreement we signed with them is the one we signed with you. So there is no reason to worry.”

That sense of equivalence may be precisely what is worrying the US. America, after all, is undertaking in Djibouti what Ambassador Tom Kelly tells me is “the biggest active military construction project in the entire world . . . It’s number one of everything we’re doing.” In his office at the US embassy, a monolith in sand-blown Haramous (what counts as the city’s upmarket district), the 54-year-old Kelly is unambiguous about the country’s vital role, describing Djibouti as “at the forefront of our national security policy right now”.

“The greatest threat to the US is terrorism, and we’re right on the front lines here,” he says. “It is an extremely important counterterrorism platform for the United States; within striking distance of two active affiliates — AQIP [al-Qaeda in the Arabian Peninsula] and al-Shabaab in Somalia.”

The US runs special ops across the continent as well as drones from Djibouti, protects 16 embassies in the region and fights al-Qaeda affiliates in Somalia, Yemen and further afield. The country is also a key point for monitoring and securing trade routes. At Obock, a sleepy fishing port at the mouth of the Bab el-Mandeb Straits, the US has installed a surveillance centre.

From here, Djibouti can monitor southern access to the Suez, track seafaring traffic, patrol coastal waters and protect maritime borders. The US built a naval pier here in 2009 and conducts counterterrorism training and houses radar equipment in the nearby Ras Bir lighthouse.

We don’t want the Americans to leave, but the Chinese invest billions of dollars in our infrastructure; that’s what the Americans are not doing

Mahmoud Ali Youssouf, Djibouti’s foreign minister

The US presence is growing; $1bn is being spent on expanding its base, bulking up its presence for the long term. While the drone site has been moved to Chabelley, 10km south-west of the capital, the main US base in the city still has what operatives call a “secret side”, with a covert compound dedicated to special operations, targeting not only AQIP and al-Shabaab but also the main branch of al-Qaeda, Boko Haram, the Lord’s Resistance Army and Isis. As US troops withdraw from Afghanistan, Djibouti is now the active centre for what US soldiers at the camp refer to as “g-wot”: the global war on terror.

“Guys who come back can’t believe how much bigger it’s got,” one of the 4,500 troops and contractors living inside the base tells me. Unlike the French, they are allowed to leave the base only rarely during their downtime. Camp conditions approximate to, in the words of one resident, “adultday caree”. US forces eat at Combat Café, watch films at the Oasis Movie Theatre, play ping pong, poker and Xbox 360 in the gaming room, go to the gym and crack gags instructing each other to “have a Djiboutiful day”.

Japanese troops, whose anti-piracy mission numbers several hundred, sometimes visit for a game of soccer or touch rugby to alleviate what one Japanese soldier described to me as a dismal time coping with heat and boredom. Japan’s base also finds ways to remind cooped-up soldiers of home: I was treated to a tour that included a room filled with manga comics, traditional Japanese communal hot baths and the rare prospect of sushi.

The confines of the camp are in contrast to the freer life downtown. My own interest was piqued when a Somali friend described Djibouti as “Mogadishu meets Las Vegas”. The country, which a diplomat calls “one of the sentinels of moderate Muslim societies”, goes more or less by the secular French penal code, a leftover from colonial days. Compared with neighbouring Somalia’s practice of sharia, it is relatively liberal. Women rarely wear the full niqab, some shirk a headscarf completely. They meet for late-night sheeshas, guava juice and gossip beside the quay in the hot night air. Many have boyfriends, even if they shield it from their families.

“You can have your private life in Djibouti. That’s why we’re not like Somalia,” an impassioned 30-year-old woman tells me, saying it was down not to French influence but to “the Djiboutian mentality”. “We are much more open, more free. We don’t talk about sex ever but it goes on out of marriage. As long as you don’t bring shame on your family, your private life is free.”

Djibouti’s nightclubs stay open until 4am, with police carefully shepherding revellers to avoid clashing with the call of the muezzin as worshippers attend morning prayers. I watch a group of five Frenchmen — all swagger, sleeves rolled up, hands in pockets — rolling out of l’Historil, a bar-restaurant, heading for the bright lights of the disco zone. Another group of French soldiers passes through the metal detectors to enter Shams, a nightclub rammed with revellers lit by disco balls. The outlines of the Statue of Liberty and a bare-breasted woman hang on the walls; 13 waitresses stand elbow to elbow serving drinks at the red-lit bar.

While parts of the city and many Muslims are dry, drinking is common. “Everyone here drinks and if they don’t, they drink in private,” one Djiboutian jokes to me over his whisky. Alcohol is sold in bars and the state licenses a clutch of tightly controlled booze importers.

Larry Modi is among them. The Christian son of an enterprising Indian runaway and an Ethiopian woman, the 67-year-old has run a supermarket in Djibouti City for many years. Warm and avuncular, with soft features, big round eyes and greying hair, he greets me at 11.30am with an offer of “champagne?”, pouring glasses for us both. His shop features floor-to-ceiling shelves of beer, gin, vodka and more. He is beloved by generations of soldiers and his office has the military memorabilia — gifts from soldiers serving out their time in this peculiar way station — to prove it; the French made him an honorary Legionnaire.

The cultural quirks of a country that appears to welcome all belie Djibouti’s repressive political climate. A London judge last month, ­ruling on a corruption case brought by Djibouti, painted a picture of President Guelleh’s regime as “capricious”, “cavalier” and on occasions “reprehensible”. Diplomats whose troops rely on the president’s welcome describe him as the crafty, powerful and impressive leader of a centralised autocracy, one stop short of dictatorship.

Human-rights activists decry a series of abuses. The government routinely suppresses the opposition, “harassing, abusing and detaining government critics”, says the latest report from the US state department, published last year, which also censures Djibouti for conducting torture, arbitrary arrest and detention of demonstrators, opposition members and journalists.

In 2011, the state put down a series of protests that hinted at the beginnings of Arab Spring-like uprisings. In December last year, police clashed with the opposition, killing at least seven and wounding dozens. Today the opposition protests against vote-rigging and harassment.

“There’s a lack of freedom, people are desperate, poor — it creates a lot of discontent. People are patient but there’s a limit,” Daher Ahmed Farah, spokesman for the opposition coalition group Union for the National Salvation, tells me.

Opposition figures such as Farah, a 54-year-old who goes by his initials “Daf”, have been ­followed, arrested and tortured. They meet and speak with the furtive glances and low voices borne of well-informed paranoia. Daf himself has been arrested more than 25 times since 2013, he says.

When I meet him one afternoon, we go to an empty café until a lone man comes and sits right next to us and, Daf feels, listens in. We lower our voices, move tables, and finally we leave.

That evening, I receive a call from reception to my hotel room. “There are some visitors here to see you.” I was not expecting any. I go downstairs to see a man wrapped in a skirt, wired on khat, and his adjunct dressed in a camel flannel uniform. “Come with us,” says the man in the skirt.

“Hello. Greetings. How can I help?” I ask, attempting a smile. “Police. Come with us.” I say I do not think it wise for us to have this conversation — or perhaps it is an arrest — at night, in the dark, in an unknown location, and could we pursue this tomorrow. They insist.

I manage to alert my back-up contacts before the police take me to what turns out to be the city’s central commissariat. Along with two other men, a colonel questions me at length, asking why I met with the opposition, what Daf said and who introduced us. I demur.

He directs the same questions to me again and again, especially the last, in a bad comedy of repetition, peppering his inquisition with the admission that it is perfectly legal for me, an accredited journalist with the right visa, to meet the perfectly legal opposition. The whole thing lasts four hours.

Back in my hotel room, I do not sleep for what is left of the night. I relate the tale the next day to a diplomat. “It’s intimidation,” he tells me.

In May 2014, Djibouti’s assumption that it was a well-protected island of peace in a troubled region was shaken when al-Shabaab launched a double suicide attack on a downtown restaurant popular with locals and westerners. One person was killed and dozens wounded.

Being targeted not only for sending troops to fight al-Shabaab in Somalia but also for hosting foreign bases — the attack took place in the same month that Djibouti signed its extension agreement with the US — was a shock to a country that had until then considered itself off-limits.

“Djibouti is calm, peaceful — a Djiboutian can never do that, they like peace too much — but, if someone is prepared to die, you can’t stop them,” says a member of the government’s antiterrorism group, which comprises 160 security officers and 600 civilians linked into a reporting network. “It was a wake-up call,” says the agent. “We have totally reorganised policing and protection along the border. Now we pick up communications — we see the value in ­talking to people and we’re much more alert.”

There’s a lack of freedom, people are desperate, poor — it creates a lot of discontent

Daher Ahmed Farah of opposition coalition group Union for the National Salvation

Djibouti’s belief that it stands to benefit from being the linchpin for an international coalition against terrorism clearly brings its own risks. But foreign minister Youssouf insists that the country has not wavered “from our belief that globalisation means everything”. Djibouti’s security role also helps establish a modicum of leverage distinct from populous, landlocked Ethiopia, on which it has always been seen as dependent. “Everyone said Djibouti would be swallowed by Somalia or Ethiopia but in the end we are the umbilical cord for Ethiopia, and now they and the Chinese see us as that,” says Youssouf, concerned to dispel the notion that Djibouti exists solely to service the Ethiopian economy.

The US has tried to enlist China as friend not foe in the military field in Africa, suggesting integrated operations in areas such as landmine clearance and peacekeeping training. China turned down a request for a joint demining programme but it participates in international anti-piracy missions and some naval exercises. The US hopes to encourage greater co-operation. Djibouti could, if it goes well, become a catalyst for what one observer calls “a joint globalised security architecture”. But the flipside augurs ill: well-armed superpowers jostling in a city of closely guarded secrets, raising the stakes on the militarisation of trade routes and security chokepoints. Managing the existence of both a US and a Chinese military base in the same country “will be a challenge for all involved”, says ambassador Kelly.

For Djibouti, the answer is clear. “For many ­years Japanese, Italians, Germans, French and Americans are just coexisting in this very small land,” says Youssouf. “So why should it be different in the future?”

Katrina Manson is writing a book about money and influence in Africa. She is the FT’s former east Africa correspondent and has spent 12 years reporting from the continent. Additional reporting by Charles Clover in Beijing

Photographs: Nichole Sobecki

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